Wall Street's winning streak: Fed rate cut speculations fuels

Record highs and trade triumphs

United States (US) stocks closed at record highs on Friday, driven by optimism over pending trade agreements and rising expectations for Federal Reserve (Fed) interest rate cuts. For the week, the US 500 (S&P 500) gained 3.44%, closing at a fresh record high, while the US Tech 100 (Nasdaq 100)gained 4.20%, also closing at a new record high. The Wall Street (Dow Jones) rose by 1612 points (+3.82%), still approximately 1250 points below its record high.

The rally on Friday night followed encouraging news of trade progress, as US Commerce Secretary Howard Lutnick announced that the US and China had finalised the trade framework reached earlier this month. He also indicated that the US administration is poised to finalise 10 additional trade agreements. Concerns over tariffs resurfaced shortly after, when President Trump announced the termination of all trade discussions with Canada following a disagreement over a digital services tax.

Economic data sends mixed signals

Turning to Friday night's economic data; Personal Income at -0.4% month -on-month (MoM) from +0.4% prior and Personal Spending at -0.1% MoM from +0.1% prior unexpectedly declined, leading to minor downward revisions to gross domestic product (GDP) forecasts. Conversely, core personal consumption expenditures (PCE) inflation was stronger than expected, coming in at 2.7% versus the 2.6% forecast.

This week's focus ahead of the 4 July long weekend:

• Job Openings and Labor Turnover Survey (JOLTS) Job Openings on Wednesday, 2 July 
• Non-farm payrolls data set to be released on Thursday, 4 July (previewed below).

Legislative developments: OBBB and beyond

There will also be interest in the progress of President Trump's One Big Beautiful Bill (OBBB), which cleared a key procedural hurdle in the Senate over the weekend with a 51-49 vote to advance the legislation for debate. Once the Senate passes its version, differences between the Senate and House bills must be reconciled before being sent to President Trump for his signature.

While the White House is pushing for a deadline of 4 July, it appears that an early August deadline is more realistic — primarily due to technical Senate objections (Medicaid cuts) and ongoing side negotiations on other critical components. Any further delays past early August could raise concerns about the debt ceiling, with the X-date currently thought to be in early September.

Non-farm payrolls preview

Date: Thursday, 3 July at 10.30pm AEST

For May, the US economy added 139,000 jobs a slowdown from April's 147,000, while the unemployment rate held steady at 4.2%.

For June, the expectation is that the US economy will add 110,000 jobs, with the unemployment rate ticking up to 4.3% from 4.2%. An unemployment rate of 4.3% or higher would be the first time the US unemployment rate has been outside of the 4% - 4.2% range in thirteen months and spark concerns that a downturn is underway in the US labour market. There is little doubt that a print of 4.4% for the unemployment rate would greatly increase the urgency a Fed rate cut in July.

The US rates market starts the week pricing in 5 basis point (bp) of cuts for July, 28 bp of cuts for the September Federal Open Market Committee (FOMC) meeting, and a cumulative 63 bp of cuts by the end of 2025.

US unemployment rate chart

US Tech 100 technical analysis

Following the US Tech 100 surge higher on 12 May, we have been working with the view that the rally in the US Tech 100 from 21 April low of 17,592 is a Wave III (Elliott Wave) that should be followed by a Wave IV pullback.

The rebound early last week from our key 21,500/21,450ish support zone opened the way for the US Tech 100 to push to new highs, suggest the Wave III is extending towards 23,000 and the Wave IV pullback has been postponed yet again.

When the Wave IV pullback does commence, it will find support initially at 22,000 before 21,500/21,400. Aware that a sustained break below the 200 day moving average (MA) at 20,609 would warn that a deeper pullback is underway.

US Tech 100 daily chart

US 500 technical analysis

Following the US 500 surge higher on 12 May, we have been working with the view that the rally from the 21 April low of 5101 was a Wave III (Elliott Wave) that should soon be followed by a Wave IV pullback.

The rebound early last week from our key 5950/5920ish support zone opened the way for the US 500 to push to new highs, suggest the Wave III is extending towards 23,000 and the Wave IV pullback has been postponed yet again.

When the Wave IV pullback does commence, it will find support initially at 6020/6000 before 5950/5940. Aware that a sustained break below the 200 day MA at 5830 and the May low at 5767 would warn that a deeper pullback is underway.

US 500 daily chart

• _{Source: TradingView. The figures stated are as of 30 June 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}